EPA grants air permit to Shell for Arctic offshore drilling in Chukchi sea off Alaska coast

ANCHORAGE — Shell Oil Co. on Monday took a step closer to tapping vast petroleum reserves off Alaska’s Arctic coasts when the federal Environmental Protection Agency approved an air quality permit for one of the company’s drilling vessels.

The EPA approved the air permit for the drilling vessel Noble Discover, which Shell hopes to use for exploratory wells in the Chukchi Sea off Alaska’s northwest coast, and its support fleet of oil spill response and supply vessels.

Shell Alaska spokesman Curtis Smith said the permit was a hopeful step.

“The delivery of final air permits for our exploration program is another in a series of recent, positive developments and adds to our confidence that we will be drilling our offshore Alaska leases by July of next year,” Smith said in an email.

Drilling during the ice-free months this year was blocked in part by a successful appeal of two air permits the EPA issued to Shell in 2010. The agency’s independent Environmental Appeals Board overturned the permits in December.

The EPA said Monday that under the new permits, Shell will reduce its fleet emissions of most key air pollutants, including fine particulates and nitrogen dioxide, by more than 50 percent from levels allowed in the 2010 permits.

The reductions, the agency said, are due largely to new emissions controls Shell added to meet a new nitrogen dioxide standard that took effect this year.

Shell has spent $4 billion on leases in the Chukchi and Beaufort seas, where outer continental shelf reserves are estimated at 26.6 billion barrels of recoverable oil and 130 trillion cubic feet of natural gas.

The U.S. arm of Royal Dutch Shell PLC needs a second air permit for a drilling vessel it hopes to use in the Beaufort Sea off Alaska’s north coast.

Shell’s current exploration plan calls for drilling up to three exploratory wells in the Chukchi Sea and two in the Beaufort Sea in 2012 and the same number in 2013.

Shell faces other hurdles before drilling can begin.

Alaska Native groups contend a spill and the side effects of exploration, including noise, will hurt their ability to harvest wildlife such as whales. Environmental groups say major industrial activity should not be allowed in the Arctic and that oil companies have not demonstrated an ability to clean up a spill in ice-choked waters.

The groups have challenged the legitimacy of the 2008 Chukchi sale in court, claiming the former federal Minerals Management Service failed to conduct adequate environmental studies.

The Bureau of Ocean Energy, Management, Regulation and Enforcement announced last month that it had taken steps to correct flaws a federal judge cited in environmental work. Public comments on the agency’s supplemental environmental work are being taken through Sept. 26.

Interior Secretary Ken Salazar suspended Arctic offshore drilling operations after the blowout of BP’s Deepwater Horizon rig in the Gulf of Mexico and said the federal government will proceed with “utmost caution.”

Brendan Cummings, an attorney for the Center for Biological Diversity, said the EPA’s decision was not surprising since the Obama administration had indicated it was going to issue the permits “regardless of what the analysis revealed.”

“With EPA’s recent retreat on national air quality standards for ozone, its delay of greenhouse regulation for power plants, and now Shell’s permit, September has been polluter-appreciation month at EPA,” he said by email.

Regardless of the fleet’s air pollution, Cummings said, the biggest problem with Arctic drilling remains an inability to clean up an oil spill in the region. Shell contends its response fleet will be able to handle spills in Arctic waters.